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Pembina Gas Services Ltd. Kakwa River Gas Plant Industrial System Designation, AUC Decision 26117-D01-2021

Link to Decision Summarized

Industrial System Designation


In this Decision, the AUC approved the application from Pembina Gas Services Ltd. (“Pembina”) for an industrial system designation (“ISD”) that encompassed electric facilities at the Kakwa River Gas Plant industrial site including the Musreau Power Plant.

Introduction

Pembina owns and operates the sour gas processing facility and the associated 20.59-megawatt (MW) Musreau Power Plant at its Kakwa River Gas Plant industrial complex. Pembina requested that the AUC designate the electric facilities as an industrial system to allow for connecting the existing power plant to the Alberta Interconnected Electric System (“AIES”). In its application, Pembina requested:

  • An industrial system designation encompassing all the electric facilities at the Pembina industrial site pursuant to section 4 of the Hydro and Electric Energy Act (“HEEA”).

  • An exemption from the operation of the Electric Utilities Act (“EUA”) for the electric energy produced from and consumed by the industrial system.

Discussion

The Kakwa River Gas Plant contains a power plant, designated as the Musreau Power Plant, that consists of three 5.63-MW natural gas-fired generating units, one 1.4-MW natural gas-fired unit and two emergency diesel generating units with a total capability of 20.59 MW. Pembina clarified that the 1.4-MW natural gas-fired generating unit was decommissioned.

Pembina explained that the Kakwa River Gas Plant was constructed prior to the completion of ATCO Electric Ltd.’s Thornton 2091S Substation. Due to distribution capacity restrictions and lack of nearby distribution infrastructure, the previous gas plant owner opted to self-supply electricity through the construction of the Musreau Power Plant. Pursuant to Decision 21583-D02-2016 Pembina has an exemption to own and operate the power plant for its own use.

Pembina explained that the natural gas-fired generating units have historically been operated at approximately 40 per cent of their nameplate power rating. At less than half of their capacity, the natural gas-fired generating units cannot provide the thermal energy required by the Kakwa River Gas Plant and the industrial processes must be supplemented by gas-fired heaters. Pembina stated that connecting to the AIES would allow the three natural gas-fired generating units to operate at full load thereby enabling the facility to fully utilize waste heat, limiting the requirement for gas-fired heaters.

Pembina submitted that there would be a significant and sustained increase in efficiency to the power plant by fully utilizing the natural gas-fired generating units and associated waste heat recovery units. Pembina stated that the generating units would improve their energy efficiency by approximately 38 per cent as a result of connecting to the AIES and being used at full capacity.

Pembina submitted that it was applying for an ISD to allow for excess electricity to be exported to the AIES during times when the generation capacity exceeded the power demand.

AUC Findings

The AUC found, that granting the requested ISD was consistent with the principles set out in Subsection 4(2) of the HEEA and with the criteria set out in Subsection 4(3) of the HEEA.

The AUC noted that it understood that Pembina sought an ISD to allow for the connection to the AIES with the intent to export electricity produced by the power plant in excess of the facilities’ electricity load. Importantly, the natural gas-fired turbine generators produce both electricity and heat that is used for the industrial operations of the facility. Pembina has stated that 100 per cent of the heat produced at full capacity will be used for heating requirements of the plant and that connecting to the AIES would improve the efficiency of the power plant.

The AUC was satisfied that Pembina’s proposal to export excess electricity would facilitate the efficient exchange with the AIES of electric energy exceeding Pembina’s own electricity requirements, but which must be generated to meet the heating requirements of the facility.

The AUC was satisfied that Pembina was not seeking an ISD to avoid system costs. The AUC considered that the power plant was reasonably scaled to meet the electricity and heating needs of the Kakwa River Gas Plant. The AUC observed that it would be impractical to precisely scale on-site generation for a specific thermal or electrical output given the need for operational variability and having regard for reasonable expansion or growth of the industrial operations. The AUC accepted that the power plant was constructed to serve the industrial operations at a time when the facility could not connect to the AIES and it was not expected that the facility would connect to the AIES. Therefore, the AUC accepted that the decision to install generation capacity in excess of the site’s electricity needs was reasonable and was taken to ensure the provision of reliability, stability and heat to the Kakwa River Gas Plant.

Having considered the applicable principles and criteria set out in Section 4 of the HEEA, the AUC determined that Pembina’s proposal met the principles and criteria for an ISD. The application was approved.

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